The article discusses the business strategy of Shriram Finance Limited (SFL), a non-banking financial company (NBFC) in India. SFL has a people-centric approach and relies on a network of branches, staff, and collection agents to operate. The company does not plan to go fully digital and instead focuses on personalized customer interactions.

SFL has a cautious approach to lending and avoids large ticket size and long-term loans. The company prefers small ticket sizes, with tenures of around three to five years, and does not lend to the affluent. Instead, it focuses on small families in rural and semi-urban areas. SFL has a strong presence in rural areas, with around 650 rural centers that will be converted into branches as the business volume increases.

The company exited its housing loans business due to the large ticket size and long tenures, which limited its liability sources. SFL shed its consumer durables financing business early on and instead focuses on gold loans, two-wheeler loans, and SME loans. The company finds these products promising due to their smaller ticket size and shorter tenures.

SFL is not keen to become a bank, as the cost of operations is higher. Instead, the company prefers to remain an NBFC, which allows it to reach customers and lend faster than a bank. The company’s strategy is to focus on a growing network of branches, staff, and collection agents to operate efficiently.

The article also highlights the importance of learning from mistakes, with SFL’s MD, Chakravarti, noting that the company allows its employees to make mistakes as part of the learning process. However, the company also emphasizes the need to ensure that mistakes do not become too expensive. Overall, SFL’s strategy is to focus on small-ticket size loans, personalized customer interactions, and a people-centric approach to operate efficiently and grow its business.

Shriram Finance Ltd, a leading finance company, has reported a significant growth in its assets under management (AUM) to Rs 8,938.61 crore for the October-December 2024 quarter. The company’s small and medium enterprises (SME) portfolio has seen a notable expansion, with AUM rising to Rs 8,938.61 crore from Rs 5,170.49 crore in the corresponding quarter of the previous financial year. This growth is attributed to the increasing demand from various industries, including manufacturing, automotive parts, production, and construction.

The company is focusing on expanding its branch network and prioritizing digital lending to professionals and enterprises. Its strategy is centered around providing credit access to SMEs, empowering production units, industrial manufacturers, and the unorganized sector. Shriram Finance Ltd is committed to solidifying its leadership in SME lending and supporting entrepreneurs and businesses across Tamil Nadu.

According to the company’s Deputy Managing Director, Muruganandha Pandiyan, the SME sector is a vital engine of economic growth, contributing significantly to GDP and employment. With the government’s emphasis on financial inclusion, digital transformation, and credit facilitation, SMEs are poised for further growth, enhancing their competitiveness and resilience in a dynamic economy.

Shriram Finance Ltd’s efforts to promote SME growth are in line with the government’s initiatives, such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which aims to facilitate credit access to SMEs. The company’s commitment to SME lending is expected to continue, with a focus on leveraging digital technologies to improve the lending process and increase access to credit for small and medium-sized businesses.

The February 2025 truck rental market was sluggish due to decreased demand from the infrastructure sector, according to a monthly bulletin released by Sriram Finance. While some routes like Delhi-Kolkata-Delhi and Bengaluru-Mumbai-Bengaluru saw slight increases in truck rentals, others like Delhi-Hyderabad-Delhi experienced a 1.1% decline. The bulletin also reported a slowdown in vehicle sales across all segments, with buyers delaying purchases until new fiscal-year discounts in March-April. Motor car sales dropped 37%, agricultural trailers and tractors fell 30% and 31%, respectively, and commercial vehicle sales, including goods carriers, three-wheelers, and commercial tractors, also declined. The electric vehicle market continued to see declining sales, with EV 2-wheeler and car sales plummeting 28% and 34%, respectively. The only exception was E-rickshaws, which saw an 11% increase. The sluggish demand was also reflected in fuel consumption patterns, with decreases in petrol and diesel usage, and flat FASTag transaction volumes. Y.S. Chakravarti, Managing Director and CEO of Shriram Finance Ltd., attributes the low demand to the impact of the recent RBI rate cut and notes that manufacturers may move goods to commercial hubs in March, potentially increasing trucking activity.